TIDMALBA
RNS Number : 2157I
Alba Mineral Resources PLC
31 March 2020
Alba Mineral Resources plc
("Alba" or "the Company")
F inal Results for the year ended 30 November 2019
The Board of Alba Mineral Resources plc is pleased to report the
results for the financial year ended 30 November 2019.
References to the "Company" or "Alba" are to Alba Mineral
Resources plc and references to the "Group" are to Alba
collectively with its Subsidiary Companies.
1. REVIEW OF ACTIVITIES
1.1 OVERVIEW
We made significant progress across our range of assets and
investments during the 2019 financial year. This included the
following achievements:
-- At Clogau, our regional exploration resulted in the discovery
of 10 new gold anomalies across the Dolgellau Gold Belt. We also
successfully drilled the Llechfraith mine area, which confirmed
that the known gold-bearing geological setting at Llechfraith
continues for some 25 metres below the deepest historic
workings.
-- At Thule Black Sands, we published a maiden Mineral Resource
Estimate from mineral sands experts IHC Robbins, which confirmed an
Inferred Resource of 19 million tonnes at an in-situ ilmenite grade
of 8.9%, translating to 1.7 million tonnes of contained ilmenite.
This would be enough ore to sustain a 12-year mine life at a mining
rate of 1.5 million tonnes per annum.
-- At Amitsoq, we completed the latest phase of metallurgical
testwork which confirmed that concentrate produced from Amitsoq
graphite contains a significant proportion (36%) of larger-size,
higher-value flake. This should assist us greatly in the
development of a positive economic model for the project.
-- At Horse Hill, a new well, HH-2z, was drilled during the
year, and we also saw continuous test production at the original
HH-1 well surpass 78,000 barrels by year end.
The only real reverse was encountered at Brockham, where the
Operator failed in its bid to flow oil from the Kimmeridge
limestones at that particular location in the Weald Basin. However,
our investment in Brockham has never been a focus for the Group. It
is true also that we did not intersect zinc-lead mineralisation in
our drilling programme at Limerick during the year. However, the
setbacks we encountered at both those projects are part and parcel
of the risk-reward nature of mineral exploration and will not
divert us from exploration activities, such as those which led to
the above successes and which can add real value to the Company's
net worth.
1.2 CLOGAU GOLD PROJECT (WALES, 90% OWNED)
We made significant progress at the Clogau Gold Project during
2019. Our regional exploration campaign identified 10 significant
anomalies away from known major mines, with gold mineralisation
confirmed so far over about a six mile section of the Dolgellau
Gold Belt. The largest new anomaly identified is about two
kilometres long, which is four times longer than the length of the
anomaly over the historic Clogau-St David's Mine. Given Clogau-St
David's was far and away the UK's largest source of historic gold
production, that anomaly is clearly going to be a focus of future
exploration activity.
We also identified potential extensions to the existing
footprint of the mine area, with infill sampling confirming
continuity of an anomaly (the "Lowri Target") lying parallel to the
Llechfraith adit and a major anomaly (the "Eryn Target") lying
above historic Llechfraith workings.
Late in 2019, we drilled a target within the historic
Llechfraith mine area. This short drilling campaign successfully
intersected the known geological setting for all historic gold
mining at Clogau, being intrusive greenstones and shear zones
dominated by intermixed Clogau shale and quartz veining. This
setting was intersected up to 25 metres below the lowest known
mined areas, thus confirming the continuity of the mined shear zone
structure for at least that distance down-dip of the historic mine
workings.
During 2019, we also completed an extensive underground
rehabilitation programme at Clogau. Those safety works are an
essential precursor to any decision to re-open the mine for
commercial production.
The Board has determined that the Clogau Gold Project remains a
key focus of the Company's business moving forward, for the
following principal reasons:
-- There is significant existing underground development in
place across five connected mine areas at Clogau, which development
would cost many millions of pounds to put in place at today's
prices.
-- The commercial potential of Clogau is significant, and is
underpinned by a number of factors: the fact that historic
production was from very high-grade pods, and that we believe there
to be real potential to discover unexploited high-grade pods; the
fact that Welsh gold typically attracts a significant premium over
normal gold spot rates; and the rally in the price of gold in the
second half of 2019 and into the start of 2020, which can only help
with the economics for restarting mining for gold at Clogau.
-- There is great potential to discover new economic gold
resources within the wider Clogau licence area, as illustrated by
the 10 new gold anomalies that we have so far discovered across the
Dolgellau Gold Belt.
Exploration at the Clogau Gold Project will continue this year
in order to refine the plan to reopen the Clogau-St David's Gold
Mine for commercial production, including a trenching programme
across a selection of our 10 new regional gold targets (see also
Section 4 (Outlook) below, regarding the impact of COVID-19 on our
planned field activities).
1.3 THULE BLACK SANDS PROJECT (GREENLAND, 100% OWNED)
In May 2019, we announced a maiden JORC-compliant inferred
resource for our Thule Black Sands Ilmenite Project ("TBS"). We
were delighted to be able to achieve this result after just one
full field season at the Project.
The Mineral Resource Estimate prepared by mineral sands
specialist IHC Robbins breaks down into three components:
-- an Inferred Resource of 19.0 million tonnes at 43.6% Total Heavy Minerals;
-- an in-situ ilmenite grade of 8.9%; and
-- 1.7 million tonnes of contained ilmenite.
A 19 million tonne Inferred Resource represents a huge step
forward for this high-grade ilmenite project. For a 1.5 million
tonne per annum mining operation, this would already mean a mine
life of more than 12 years.
Our work at TBS in 2020 will include pursuing off-take
discussions with strategic investors and industrial groups.
1.4 AMITSOQ GRAPHITE PROJECT (GREENLAND, 90% OWNED)
With its exceptionally high grades and the fact that it
incorporates a historic producing mine, Alba management and our
technical team retain great belief in the potential of the Amitsoq
Graphite Project.
During 2019 we completed a Phase 2 metallurgical testwork
programme at Amitsoq which built on the preliminary testwork
programme we carried out in 2018. That initial testwork had
confirmed that a saleable (97.3% Total Graphitic Carbon)
concentrate could be produced from Amitsoq graphite. Our 2019
programme was designed to build on that result by maximising the
amount of high-value flake graphite in the concentrate. The
programme was an unqualified success, as we were able to show that
a significant proportion (36%) of the refined product consisted of
large, jumbo and super-jumbo flakes, which attract a premium price
in the graphite market. This will greatly assist in our development
of a positive technical economic model for the Amitsoq Project.
In February 2020 we announced the appointment of leading
graphite experts ProGraphite GmbH for the next testwork phase,
which will be focused on developing an optimised method for the
production of graphite that is suitable for lithium-ion batteries
("LIBs"). The electric vehicle ("EV") sector is a major growth
market for graphite. LIBs use small to medium flake graphite, so if
we are able to confirm the amenability of Amitsoq graphite for use
in LIBs, it will mean we will have a ready market both for our
large to super-jumbo flake (which is used in traditional industries
such as steel manufacture and refractories) and for our small to
medium flake (used in the EV sector).
In terms of field work at Amitsoq, as previously reported we
have been in the process of finalising a drilling programme for
this summer, with the objective being to define a maiden JORC
resource at Amitsoq. However, see also Section 4 (Outlook) below,
regarding the impact of COVID-19 on our planned field
activities.
1.5 INGLEFIELD MULTI-ELEMENT PROJECT (GREENLAND, 100% OWNED)
During the year, we commissioned a detailed technical review of
our Inglefield Project from South Africa-based TECT Geological
Consulting and XPotential Geoscientific Consulting, who are experts
respectively in structural geology and geophysical data
interpretation. Through the systematic assimilation of data from
our maiden exploration campaign in 2018 and data sets from previous
field programmes, they were able to identify a number of
high-priority targets at Inglefield for both iron ore-copper-gold
("IOCG") and carbonate-hosted zinc-lead deposits.
As our focus in Greenland for the coming year has been on
preparations for field activities at Amitsoq, we do not have plans
currently to go into the field at TBS or Inglefield this
season.
In terms of our overall strategy in Greenland, Alba's Board
believes the Company's Greenland mining portfolio to comprise some
of the best assets in the country. However, as it is not currently
feasible to allocate significant funds to all of the Company's
projects, we made it clear during the year that we will be seeking
expressions of interest for external investment into our Greenland
assets, with a view to substantially de-risking them while
retaining a material stake in the upside.
1.6 LIMERICK BASE METALS (IRELAND, 100% OWNED)
In May 2019, we undertook a short exploration drilling campaign
at our Limerick Zinc-Lead Base Metals Project which did not
intersect mineralised zones. While there remain a number of other
interesting targets at the Limerick Project which have never been
drilled, the Group plans to target its spending elsewhere in the
current period and therefore under IFRS 6 criteria the project
should be impaired in value.
1.7 OIL & GAS INVESTMENTS
(a) Horse Hill Oil Project (England, 11.765% interest)
Significant progress was made at Horse Hill during 2019 towards
the goal of establishing permanent commercial oil production at the
site. Extended well test operations continued at both the Portland
Sandstone and the Kimmeridge Limestone intervals, and in August
2019 it was announced that aggregate oil production had reached a
milestone of 60,000 barrels.
In September 2019 we announced that operations had commenced for
the drilling of the new Horse Hill-2z ("HH-2z") Portland horizontal
well. In mid-November we reported that the drilling had been
successfully completed, with 2,500 ft of horizontal trajectory
drilled wholly within the Portland reservoir's most oil productive
zone.
We also announced in September 2019 that Surrey County Council
had granted full planning consent for long-term oil production at
Horse Hill. The consent grants permission to produce oil over a
period of 25 years at up to 3,500 barrels of oil per day from a
total of six wells within the Portland and Kimmeridge oil pools,
including the existing Horse Hill-1 ("HH-1") well and the HH-2z
horizontal well.
As at the financial year end, we reported that total HH-1 test
production stood at over 78,000 barrels stretching back to the
start of test production in July 2018.
Post year end, we reported that during a scheduled shut-in for a
long-duration pressure build-up test at HH-2z, evidence of
formation water ingress was recorded. For that reason, an
additional well intervention was planned to shut-off the water
source. On 9 March 2020 it was announced that that intervention was
successful and dry oil had flowed to surface. It was also announced
that further clean-up activities would be carried out prior to a
shut-in. We expect extended well test ("EWT") operations from HH-2z
to commence directly thereafter. Production from the horizontal
section of the Portland Sandstone reservoir has the potential to
exceed production from a vertical Portland producer such as
HH-1.
In January 2020 we reported that, subject to receipt of
regulatory approvals, the Operator now planned to bring HH-1 into
commercial production this spring, to be followed by HH-2z in the
third quarter of this year, subject to the successful completion of
the planned HH-2z EWT programme. Shortly before the publication of
this report, the Operator confirmed that the Oil and Gas Authority
("OGA") had approved the Horse Hill Field Development Plan ("FDP")
and consented to the start of long-term production ("Production")
from the field. This should allow net recoverable reserves to be
allocated to the field, which should assist with attracting debt
finance to the project. The Operator has said that Portland oil
pool Production will commence via HH-1, with Kimmeridge Production
planned to be added in late spring 2020 by converting the well to a
dual completion. Production from HH-2z is planned to follow upon
completion of the current EWT campaign.
Turning to corporate matters in relation to Horse Hill, in June
2019 we announced our decision not to fund the latest cash call
received from the Operator, Horse Hill Developments Limited ("HHDL"
or the "Operator"). While we have not decided whether we will fund
future cash requirements at Horse Hill, it is possible that we will
decide not to fund, for a number of reasons including our desire to
focus our efforts and expenditure on the mining projects which are
under Alba's sole control. But regardless of whether Alba does or
does not fund future cash calls, our investment in Horse Hill
remains a near-term cash-generative opportunity for Alba. As such,
and as we announced during the year, we are open to either
retaining our stake in the Project through to permanent commercial
production, when HHDL should generate material oil sales revenues,
or to giving serious consideration to any third-party offer
received prior to production which properly reflects the value of
our stake.
(b) Brockham Oil Project (England, 5% interest)
During the year, the Operator at Brockham, Angus Energy,
announced that it had successfully perforated the Brockham BRX4Z
well ("BRX4Z") as the precursor to commencing commercial flow test
operations from the Kimmeridge limestones at BRX4Z. However, the
Operator subsequently announced that part of the perforated
interval was producing water, which was believed to be inhibiting
the flow of oil. Despite subsequently successfully isolating the
water-producing zone, Angus was still unable to recover oil to
surface, leading it to conclude that in its view it would not be
likely for commercial hydrocarbon flow to be achieved from the
Kimmeridge layer at Brockham by conventional means.
The Group's investment in the Brockham oil field has been fully
impaired in value during the period, due to the unsuccessful flow
testing of the Kimmeridge formation. While the Board is naturally
disappointed by this outcome, Alba's investment in Brockham has
always been a small part of Alba's asset portfolio at just 4.3% of
the Group's total net assets of GBP8.75 million prior to the
impairment charge.
2. CORPORATE AND FINANCIAL
In March 2019 we announced that my fellow Director Michael Nott
and I had subscribed for shares in the Company (in Mike's case
6,666,667 shares, and in my case 8,333,333 shares), at a price of
GBP0.003 per share, being 28% above the most recent mid-market
closing price for Alba shares prior to the placement.
In June 2019 we announced that we had raised GBP500,000 (before
expenses) through the issue of 250,000,000 new ordinary shares at a
price of 0.2 pence per ordinary share.
The appointment in June 2019 of SVS Securities plc as Joint
Broker to the Company was subsequently terminated in August 2019,
when the Company was informed that SVS had been placed into Special
Administration.
In November 2019 we announced that we had raised GBP350,000
(before expenses) through the issue of 218,750,000 new ordinary
shares at a price of 0.16 pence per ordinary share. Share warrants
were also issued to each subscriber in the placing, with one
warrant being issued for each share subscribed for, for a total of
218,750,000 warrants. The warrants have an exercise price of 0.32
pence per share and an expiration date of 24 months from the date
of issue. The warrants will be subject to an accelerator provision,
such that if at any time during their 24 month duration the 10-day
volume-weighted average price ("VWAP") of Alba ordinary shares
exceeds 0.64 pence, Alba may give warrant holders notice to
exercise their warrants, failing which they will automatically
expire.
After the financial year end we announced that we had entered
into an unsecured financing of up to GBP767,000 (which can be
increased by mutual consent to up to GBP1,054,500) with US-based
institutional investment fund, Bergen Global Opportunity Fund, LP
(the "Investor") (the "Financing"). The Financing is structured by
way of the issue by Alba to the Investor of up to five zero-coupon,
unsecured convertible securities. Upon its issue, the Investor pays
Alba a fixed purchase price for the convertible security, namely
GBP192,000 for the first convertible security (which has a nominal
value of GBP223,000), GBP192,000 for the second Convertible
Security (nominal value GBP192,000), GBP153,000 for the third
Convertible Security (nominal value GBP153,000) and GBP115,000 for
each of the fourth and fifth Convertible Securities (nominal value
GBP115,000 each). The Investor will then have the right to convert
those convertible securities into Alba ordinary shares based on the
VWAP of Alba shares during a specified period prior to conversion
or, in respect of up to GBP192,000 of the Convertible Securities,
at a fixed price of GBP0.001625.
The Financing is structured in such a way as to provide Alba
with access to capital at regular intervals over the next 18
months, allowing us to fund key value-enhancing work activities
across our mining portfolio. The issue of the second to fifth
tranches of funding is subject to the fulfilment by Alba, at each
funding stage, of certain specified conditions and warranties.
On 3 March 2020, we announced that we had closed the first
tranche of funding under the Financing, with Alba issuing the first
convertible security referred to above and receiving payment of
GBP192,000 from the Investor. Subject to the fulfilment of the
specified conditions and warranties, the second funding tranche
will be issued four months after the Company's 2020 AGM (which will
be held in April) with each of the third, fourth and fifth funding
tranches being issued in further four monthly intervals
thereafter.
As in prior years, our results for the year were impacted by
significant accounting adjustments. As shown in our Consolidated
Income Statement, the Group's loss of GBP1.3m included GBP0.5m of
impairment charges from providing against the value of our share of
the Brockham Oil Project and our Limerick Base Metals Project.
Underlying administrative expenditure remained relatively
consistent year on year.
3. EVENTS AFTER THE REPORTING PERIOD
Key announcements after the reporting period are noted in
Section 1 (Review of Activities) and Section 2 (Corporate and
Financial) above, and in Note 5 of the Notes section below.
4. OUTLOOK
The past 12 months have been challenging ones for Alba. The
markets have been capricious, and lately of course we have seen
some of the biggest UK stock market falls in decades, the reasons
for which I will return to later. Putting that aside, we did not
see the bounce in our share price that we would have expected from
the significant advances we were able to make across our projects
during the year, such as when we confirmed a maiden JORC Resource
at Thule Black Sands, when we identified gold mineralisation across
a six-mile stretch of the Dolgellau Gold Belt or when continued
progress at Horse Hill saw that oil field obtain planning
permission for 25 years of production and where continued test
production is now approaching its two year anniversary.
To illustrate this point, contrast the market's reaction to the
Horse Hill Consortium's drilling of the HH-1 well in 2014 with the
market's reaction to the drilling of the HH-2z well in 2019. While
HH-1 was being drilled, in around September 2014, we saw a fourfold
increase in our share price, whereas during the drilling of the
second well, in September 2019, we (and other Consortium members,
for that matter) saw no appreciable improvement in share price
performance.
While it is difficult to maintain the excitement felt by
investors in the early stages of a new discovery, such as when we
struck oil at Horse Hill in 2014, it is also bound up in the very
nature of the resources sector, where it typically takes years to
turn an initial exploration discovery into a development asset with
the Resources and Reserves and economics to support a Bankable
Feasibility Study, which in turn can attract the debt finance
needed to build a mine. Even in onshore oil and gas projects, where
the infrastructure requirements are typically more modest, it can
still take several years to move into commercial production, not
least as the regulatory hurdles, as we have seen in the Weald
Basin, can be significant. These realities can be hard to square
with the average AIM investor's desire to see a material return on
his or her investment in fairly short order, probably within a 6 to
12 month timeline. As an investor myself, I can completely
understand that perspective.
The bottom line, however, is that we retain a solid belief in
our core projects at Alba and we will employ the technical skill
and endeavour of our highly experienced team of mining
professionals to keep pushing our projects forward until such time
as our successes are properly reflected in our share price. Even
then, as I alluded to earlier, those successes can be completely
drowned out by the much more powerful macro-economic factors which
loom from time to time and which can easily overwhelm any otherwise
positive developments, such as we have seen in recent times with
the US-China trade wars, the self-inflicted Brexit wound and now
the coronavirus pandemic.
On 23 March 2020, the UK Prime Minister announced that UK
residents will only be allowed to leave their home for certain very
limited purposes. In respect of workers, this includes travelling
to and from work, but only where absolutely necessary. He also
announced the immediate closure of all shops selling non-essential
goods and a prohibition on all gatherings of more than two people
in public. We will need to consider the precise effect of these,
and other, announced measures upon Alba's business and affairs. I
know that the PM also committed to keep these restrictions under
review, to look at them again after a period of three weeks and to
relax them if the evidence shows this to be possible. However at
Alba we are operating on a working assumption that our ability to
work in the field at our mining projects will be severely
compromised, if not rendered impossible, in the next three month
period at least.
At the time of writing, the number of confirmed cases of
COVID-19 in the United Kingdom is in the thousands, and the number
of deaths is now, tragically, over one thousand. This is an
unprecedented situation for many of us, certainly for those of us
not old enough to have lived through the Second World War or its
aftermath. The impact of the COVID-19 pandemic upon Alba is one
that we not only feel in the UK, where we are headquartered and
where our Clogau Gold Project and oil and gas investments are
located, but also in Ireland and Greenland where we also own and
operate projects. At present, the Irish Government is advising that
anyone coming into Ireland will be required to either restrict
their movements or to self-isolate on arrival for 14 days, with
only essential supply chain services such as hauliers, pilots and
maritime staff being exempt from these restrictions. In Greenland,
the authorities have announced a cessation of all non-emergency
domestic and international air traffic for an initial two-week
period from 20 March 2020.
The COVID-19 pandemic, and the ongoing measures imposed by the
Government agencies in those countries in which Alba operates, will
have an inevitable impact upon our planned work activities. On 15
January 2020, we announced details of our planned work activities
for 2020, including the following key field programmes:
-- In relation to Clogau, we announced plans to undertake a
trenching programme across a selection of the 10 new gold targets
identified from the Company's regional exploration, as well as
continued environmental baseline studies and ongoing discussions
with the Mineral Planning Authority detailing the works required to
re-open the Mine and the proposed operations once the Mine is
re-opened; and
-- In relation to Amitsoq, we announced that plans were being
advanced to undertake a maiden drilling campaign with the objective
of enabling a maiden JORC mineral resource estimate to be
declared.
Subsequent to that announcement, the rapidly developing
situation in relation to the COVID-19 pandemic has placed some
considerable doubt upon our ability to execute these programmes in
full this year. This is for a host of reasons, including the
curtailment of international flights to and from the countries in
which we operate our projects, the possibility that we will be
unable to secure exploration personnel, equipment or materials
necessary to undertake our planned work activities and the ongoing
restrictions imposed by the authorities in the countries in which
we operate (which restrictions may well be increased in the coming
weeks and months).
Alba's management continues to monitor these developments on a
daily basis. Our overriding concern during this time is to ensure
the health and safety of our personnel and of all members of the
public with whom they may come into contact. Our field teams have
to work in close proximity with one another, undertaking manual
labour and often operating in constrained settings, such as when
working underground at Clogau. For these reasons, we will not send
our personnel into the field unless we are satisfied that their
welfare and that of the general public will not be compromised.
The COVID-19 pandemic has also, of course, had a massive impact
on global stock markets in recent weeks, and Alba's share price has
been caught up in the cross-winds of the sudden slump in investor
confidence across the board. While these market conditions continue
to hold, our ability to progress our planned joint venture or
divestment programme across our asset portfolio will likely be
affected, as potential joint venture partners and buyers will be
far less likely to want to consider any new investments during this
time. In relation to the funding of our work activities, our
ability to raise capital through the equity markets must now be
considered severely constrained, although we do have the benefit of
the financing package arranged with Bergen Global Opportunity Fund,
LP, as announced only last month. Shareholders' attention is also
drawn to the wording in the Going Concern section of Note 2 to this
announcement, below.
Despite these conditions, we do continue to work across our
project portfolio. At Clogau, for instance, prior to the most
recent restrictions on non-essential travel, our contractors were
able to complete water tests in and around the Clogau mine adits.
Initial indications are that the water is fairly clean, which are
promising signs as we investigate the dewatering of the lower
Llechfraith mine area where we drilled in late 2019, in terms of
the level of treatment of the water that will be required. We await
the return of the assays from the laboratory before deciding on the
next steps. In respect of our discussions with the Mineral Planning
Authority ("MPA") regarding the re-opening of the Clogau mine for
commercial production, we have now received detailed responses from
the MPA to our formal Pre-Application Enquiries, and our planning
consultants and technical team are working through those with a
view to refining our overall plan for the re-opening of the mine,
which will form the basis of a formal planning application. Last
month we also announced a new testwork programme for Amitsoq.
In short, there is a lot of work we can usefully progress in
relation to our projects even while we are constrained in our field
activities.
Alba was first listed on the AIM stock market in 2005. As such,
the Company has been through the last serious global financial
crisis that occurred in 2007-08 and Alba's management has
first-hand experience of the measures needed to protect the Company
in a period of sustained economic downturn such we currently face.
We will take all measures reasonably within our control to protect
the Company's projects and finances so that we will emerge strong
once the worst of the COVID-19 pandemic and the ensuing global
financial crisis is over.
We firmly believe that the strategy we have implemented at Alba
over the past 5 or 6 years, during which time we have identified
and then moved to secure majority stakes in a range of undervalued
assets with real production potential, has been the right one to
pursue. With the current turmoil in the investment markets, our
strategy may take a little longer to execute, however we remain
confident that it will ultimately bear fruit for Alba and its
shareholders.
On behalf of the Board, I would like to take this opportunity to
thank Alba shareholders for their ongoing support.
George Frangeskides
Executive Chairman
30 March 2020
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Forward-Looking Statements
This announcement contains forward-looking statements relating
to expected or anticipated future events and anticipated results
that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, competition for qualified staff, the
regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political
jurisdiction, uncertainties regarding the results of exploration,
uncertainties regarding the timing and granting of prospecting
rights, uncertainties regarding the Company's or any third party's
ability to execute and implement future plans, and the occurrence
of unexpected events. Actual results achieved may vary from the
information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors.
For further information, please contact:
Alba Mineral Resources plc
George Frangeskides, Executive Chairman +44 20 7907 4297
Cairn Financial Advisers LLP (Nomad)
James Caithie / Liam Murray +44 20 7213 0880
First Equity Limited (Broker)
Jason Robertson +44 20 7374 2212
CONSOLIDATED INCOME STATEMENT
For the year ended 30 November 2019
2019 2018
GBP GBP
Revenue - -
Cost of sales - -
------------- -------------
Gross loss - -
Administrative expenses (772,849) (885,314)
Impairment of intangible assets (539,554) -
Operating loss (1,312,403) (885,314)
Revaluation of investment - 825,533
Share of net loss of joint venture - (15,325)
------------- -------------
Loss for the year before tax (1,312,403) (75,106)
Taxation - -
Loss for the year (1,312,403) (75,106)
============= =============
Attributable to:
Equity holders of the parent (1,311,172) (72,823)
Non-controlling interests (1,231) (2,283)
------------- -------------
(1,312,403) (75,106)
============= =============
Loss per ordinary share
Basic (0.039) pence (0.003) pence
------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 November 2019
2019 2018
GBP GBP
Loss after tax (1,312,403) (75,106)
Items that may subsequently be reclassified
to profit or loss:
* Foreign exchange movements 39,040 2,707
Total comprehensive loss (1,273,363) (72,399)
=========== ========
Total comprehensive loss attributable
to:
Equity holders of the parent (1,272,132) (70,116)
Non-controlling interests (1,231) (2,283)
(1,273,363) (72,399)
=========== ========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 November 2019
2019 2018
GBP GBP
Non-current assets
Property, plant and equipment 85,000 85,000
Intangible fixed assets 3,050,430 3,076,783
Investments - Horse Hill Developments
Limited 5,430,000 5,430,000
Investments - other 11,125 7,161
Total non-current assets 8,576,555 8,598,944
----------- -----------
Current assets
Trade and other receivables 81,460 61,894
Cash and cash equivalents 211,333 585,795
----------- -----------
Total current assets 292,793 647,689
----------- -----------
Current liabilities
Trade and other payables (356,232) (493,195)
Financial liabilities (137,312) (287,250)
Total current liabilities (493,544) (780,445)
----------- -----------
Net current (liabilities) / assets (200,751) (132,756)
=========== ===========
Net assets 8,375,804 8,466,188
=========== ===========
Capital and reserves
Called up share capital 4,582,983 4,099,233
Share premium account 7,128,257 6,786,382
Warrant reserve 722,998 624,039
Retained losses (4,273,794) (3,167,943)
Merger reserve - 200,000
Foreign currency reserve 230,018 190,978
----------- -----------
Equity attributable to equity holders
of the parent 8,390,462 8,732,689
Non-controlling interests (14,658) (266,501)
Total equity 8,375,804 8,466,188
=========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 November 2019
Share Share Warrant Profit and Merger Foreign Attributable Non Total
capital premium reserve loss reserve currency to equity controlling
reserve holders interest
of parent
GBP GBP GBP GBP GBP GBP GBP GBP GBP
At 1 December
2017 3,086,246 4,655,702 231,969 (3,095,120) 200,000 193,685 5,272,482 (264,218) 5,008,264
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Loss for the
period - - - (72,823) - - (72,823) (2,283) (75,106)
Translation
differences - - - - - (2,707) (2,707) - (2,707)
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Comprehensive
loss for the
period - - - (72,823) - (2,707) (75,530) (2,283) (77,813)
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Shares issued 1,012,987 2,253,680 148,914 - - - 3,415,581 - 3,415,581
Share issue
costs - (123,000) - - - - (123,000) - (123,000)
Equity settled
share-based
payments - - 243,156 - - - 243,156 - 243,156
At 30 November
2018 4,099,233 6,786,382 624,039 (3,167,943) 200,000 190,978 8,732,689 (266,501) 8,466,188
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Profit /
(loss) for
the period - - - (1,311,172) - - (1,311,172) (1,231) (1,312,403)
Translation
differences - - - - - 39,040 39,040 - 39,040
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Comprehensive
loss for the
period - - - (1,311,172) - 39,040 (1,272,132) (1,231) (1,273,363)
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
Shares and
warrants
issued 483,750 389,875 21,875 - - - 895,000 - 895,000
Share issue
costs - (47,500) - - - - (47,500) - (47,500)
Transfer on
write-down of
investment - - - 200,000 (200,000) - - - -
Equity settled
share-based
payments - - 82,405 - - - 82,405 - 82,405
Transfer on
expiry of
warrants - - (5,321) 5,321 - - - - -
Owner's
contribution - - - - - - - 253,074 253,074
At 30 November
2019 4,582,983 7,128,257 722,998 (4,273,794) - 230,018 8,390,462 (14,658) 8,375,804
--------- --------- ------- ----------- --------- -------- ------------ ----------- -----------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 November 2019
2019 2018
GBP GBP
Cash flows from operating activities
Operating loss (1,312,403) (885,314)
Share based payment charge 82,405 243,156
Impairments of intangible assets 539,554 -
Change in fair value of other investments (3,964) 7,174
Foreign exchange revaluation adjustment 45,614 (2,707)
Increase/(decrease) in creditors 44,474 120,032
Decrease/(increase) in debtors (19,566) (26,619)
----------- -----------
Net cash used in operating activities (623,886) (544,278)
----------- -----------
Cash flows from investing activities
Payments for deferred exploration expenditure (522,179) (733,527)
Payments for intangible fixed assets (165,897) -
Cash on acquisition of subsidiary - 44,661
Investments - (985,002)
----------- -----------
Net cash used in investing activities (688,076) (1,673,868)
----------- -----------
Cash flows from financing activities
Proceeds from the issue of shares and warrants 895,000 2,300,000
Proceeds from short term borrowings 90,000 -
Costs of issue (47,500) (123,000)
----------- -----------
Net cash generated from financing activities 937,500 2,177,000
----------- -----------
Net decrease in cash and cash equivalents (374,462) (41,144)
=========== ===========
Cash and cash equivalents at beginning of period 585,795 626,939
=========== ===========
Cash and cash equivalents at end of year 211,333 585,795
=========== ===========
Significant non-cash transactions were the impairment charge
against intangible assets shown above.
Accruals includes capital items of GBP59,025 (2018:
GBP227,326).
NOTES
1. BASIS OF PREPARATION
Alba Mineral Resources plc is a public limited company
incorporated and domiciled in England & Wales, whose shares are
publicly traded on the AIM market of the London Stock Exchange plc.
The registered office address is 6th Floor 60 Gracechurch Street,
London, United Kingdom, EC3V 0HR.
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the years ended
30 November 2019 or 30 November 2018. The financial information has
been extracted from the statutory accounts of the Group for the
years ended 30 November 2019 and 30 November 2018.
The auditor, Nexia Smith & Williamson, has reported on the
statutory accounts for the years ended 30 November 2019 and 2018;
the audit reports were unqualified and did not contain statements
under either section 498(2) or 498(3) of the Companies Act 2006.
However, in their report on the statutory accounts for both the
year ended 30 November 2019 and 30 November 2018 the auditor drew
attention to the material uncertainty which exists with respect to
the ability of the group to continue as a going concern, as
explained below.
The consolidated financial statements have been prepared on the
historical cost basis, save for the revaluation of certain
financial assets.
During the year ended 30 November 2019 the Group adopted IFRS 9
Financial Instruments and IFRS 15 Revenue from contracts with
customers but neither standard had a material effect on the results
of the Group. Otherwise there were no changes to the Group's
accounting policies for the year ended 30 November 2019 as compared
to those published in the statutory financial statements for the
year ended 30 November 2018.
This announcement was approved by the Board on 30 March
2020.
2. GOING CONCERN
Going concern
Based on financial projections prepared by the Directors, the
Group's current cash resources are insufficient to enable the Group
to meet its recurring outgoings and projected exploration
expenditure for the entirety of the next twelve months. However,
the Directors have a reasonable expectation that the Group will
continue to be able to meet its commitments for the foreseeable
future by raising funds when required from the equity capital
markets. The Group and Company may also consider future joint
venture funding arrangements in order to share the costs of the
development of its exploration assets, or to consider divesting of
certain of its assets and realising cash proceeds in that way in
order to support the balance of its exploration and investment
portfolio.
Given the current share price of the Company trades below its
par value of GBP0.001, the ability of the Company to raise funds by
the issuance of shares is currently constrained since, under the
Companies Act 2006, the Company may not allot shares for an issue
price less than their par or nominal value. However, it is noted
that the Company intends to put forward a resolution to reduce the
par value of its ordinary shares to GBP0.0001 at its forthcoming
Annual General Meeting to be held in April 2020. Assuming that
resolution is passed, the Company will thereafter be able to issue
ordinary shares at or above that new par value.
COVID-19, and the uncertainty over its duration, is creating
volatility in equity markets and will make raising additional funds
from any source significantly more challenging.
The Directors continue to adopt the going concern basis of
accounting in preparing the financial statements, but note that
there is a material uncertainty over the ability of the Company and
the Group to fund the recurring and projected expenditure,
including development of the Group's exploration assets. If the
Company and the Group are unable to raise necessary funds, the
ability of the Company and the Group to continue as going concerns
would be in significant doubt and they may be unable to realise
their assets and discharge their liabilities in the normal course
of business. In particular, the inability to fund the continued
development of the Group's exploration assets may result in them
becoming impaired and any failure to contribute its share of future
exploration and development activities in respect of the oil and
gas investments would result in the dilution of the Group's
interests in those assets.
3. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss
attributed to ordinary shareholders of GBP1,311,172 (2018:
GBP72,823 loss) by the weighted average number of shares of
3,403,506,056 (2018: 2,717,353,000) in issue during the year. The
diluted loss per share calculation is identical to that used for
basic loss per share as warrants are not dilutive due to the losses
incurred.
4. RELATED PARTY TRANSACTIONS
Stirling Corporate Limited, a company which George Frangeskides,
a director of the Company, controls, charged the Group GBP39,191
(2018: GBP30,319) for the provision of financial and administrative
services. As at the year end GBP17,185 (2018: GBP21,395) was owed
to Stirling Corporate Limited and GBP8,702 was accrued for invoices
expected. The independent Directors, having consulted with the
Company's Nomad, consider that the terms of this transaction are
fair and reasonable insofar as the Company's shareholders are
concerned.
Aetos Consulting Limited, a company which George Frangeskides, a
director of the Company, jointly controls, charged the Group fees
for consultancy services of GBP37,853 (2018: GBP36,225). Of these
fees, GBP28,514 are not reported as director's fees as they
represent work carried out specifically on the advancement of the
Group's project portfolio and have therefore been capitalised. As
at the yearend GBP18,710 (2018: GBP36,225) was owed to Aetos
Consulting Limited and GBP37,853 was accrued for invoices
expected.
Woodridge Associates, a business which Michael Nott, a director
of the Company, controls, charged the Group fees for consultancy
services of GBPnil (2018: GBP58,750). As at the year end, GBP50,500
(2018: GBP58,750) was due to Woodridge Associates.
5. EVENTS AFTER THE REPORTING PERIOD
Corporate
After the financial year end, in February 2020 we announced that
we had entered into an unsecured financing for GBP767,000 (which
can be increased by mutual consent to up to GBP1,054,500) with
US-based institutional fund, Bergen Global Opportunity Fund, LP
(the "Financing"). In March 2020 we announced that we had closed
the first tranche of funding under the Financing, with Alba issuing
the first convertible security and receiving payment of GBP192,000
from the Investor. 48 million ordinary shares were issued in
accordance with the terms of the agreement. Subject to the
fulfilment of the specified conditions and warranties, the second
funding tranche will be issued four months after the Company's 2020
AGM (which will be held in April) with each of the third, fourth
and fifth funding tranches being issued in further four monthly
intervals thereafter.
Horse Hill Developments Limited
Since January 2020 we have seen the price of Brent crude oil
drop from a high of $70 per barrel to a low of $27 per barrel
earlier this month.
Post year end, we reported in relation to Horse Hill that a well
intervention to shut-off a water ingress at HH-2z had been
successful and that dry oil had flowed to surface. It was also
announced by the Operator, HHDL, that further clean-up activities
would be carried out prior to a shut-in.
Shortly before the publication of this report, HHDL confirmed
that the Oil and Gas Authority ("OGA") had approved the Horse Hill
Field Development Plan ("FDP") and consented to the start of
long-term production ("Production") from the field which should
allow net recoverable reserves to be allocated to the field. The
Operator further stated that Portland oil pool Production will
commence via HH-1, with Kimmeridge Production planned to be added
in late spring 2020 by converting the well to a dual completion.
Production from HH-2z is planned to follow upon completion of the
current EWT campaign.
Exploration licences
In March 2020 the Group confirmed the reduction of certain of
its Greenlandic licence areas with effect from 31 December 2019, as
follows:
- Amitsoq Graphite Project (Mineral Exploration Licence ("MEL")
2013-06): licence area reduced from 146 km(2) to 48 km(2).
- Inglefield Multi-Element Project (MEL 2017-40 and MEL
2018-25): MEL 2018-25 reduced from 466 km(2) to 88 km(2).
Application has been made for MEL 2017-40 to be relinquished in
full. The Company is in discussions with the Mineral Licence and
Safety Authority of Greenland to formalise this.
- Melville Bay Iron Ore Project (MEL 2017-41): licence area reduced from 53 km(2) to 17km(2).
These reductions have not affected the key deposits and targets
held within the Group's Greenlandic licence portfolio, which have
all been retained.
In respect of the Group's Limerick Base Metals Project, held by
subsidiary Aurum Mineral Resources Limited ("AMR") under
exploration licence PL3824, this licence was due for renewal by 26
March 2020. Given that renewal would have involved a commitment by
AMR to expend further sums on exploration, and given the current
COVID-19 global pandemic makes it uncertain when the Group will be
able to resume field operations, in March 2020 AMR wrote to the
Exploration and Mining Division ("EMD") of the Department of
Communications, Climate Action and Environment of The Republic of
Ireland, to request an extension of time for AMR to make a decision
on whether to apply for renewal. At the time of writing, the EMD's
advice is awaited.
Amitsoq (the Greenland graphite project)
In February 2020 we announced the appointment of leading
graphite experts ProGraphite GmbH for the next testwork phase in
respect of our high-grade Amitsoq graphite project. The testwork
programme will be focused on developing an optimised method for the
production of graphite suitable for lithium-ion batteries.
COVID-19
The potential impact of the COVID-19 pandemic is discussed in
the Chairman's statement preceding these notes.
The ability of the Company to raise funds through equity capital
raisings, joint ventures or divestments can be expected to remain
constrained for so long as current market conditions prevail.
However the Company does have the benefit of the financing package
arranged with Bergen Global Opportunity Fund, LP, as described
above.
Aside from these funding constraints, the COVID-19 pandemic may
adversely affect the Group's ability to implement its planned
exploration programmes for the coming year, whether due to
logistical challenges, such as the curtailment of international
flights, because of the unavailability of exploration personnel,
equipment or materials or because of Governmental restrictions
which are imposed from time to time in any of the jurisdictions in
which the Group or its personnel or contractors operate.
On 23 March 2020, the UK Prime Minister announced that UK
residents will only be allowed to leave their home for certain very
limited purposes. In respect of workers, this includes travelling
to and from work, but only where this is absolutely necessary and
cannot be done from home. The Prime Minister also announced the
immediate closure of all shops selling non-essential goods and a
prohibition on all gatherings of more than two people in public.
The Company will need to consider the precise effect of these, and
other, announced measures upon its business and affairs for so long
as these measures remain in place, including by reviewing in detail
the final provisions of the COVID-19 emergency response legislation
which is currently passing through the Houses of Parliament.
In his announcement of 23 March 2020, the Prime Minister
committed to keep the announced restrictions under constant review,
to look at them again after a period of three weeks and to relax
them if the evidence shows this to be possible.
In terms of the Company's forward planning, the Company has
adopted a working assumption that these restrictions will remain in
place for a period of at least three months and that work on site
at the Group's UK operations, namely at the Clogau Gold Project,
will not be possible during that time. As the Group does not
operate the oil and gas projects in which the Group has
investments, namely the Horse Hill and Brockham Projects in the
Weald Basin in England, the Company is not able to comment upon
what impact the Government's restrictions will have on ongoing
operations at those sites. The Company awaits the advice of the
Operators of those projects in that regard.
The Directors' view is that being unable to undertake field work
in the next three months should not have a material impact on the
valuation of the Group's assets. In this regard, the following
considerations apply:
In respect of the Clogau Gold Project in Wales, there is a
significant amount of technical and geological work and studies
that can be undertaken which does not involve field work, building
on the significant technical database that has been generated by
the Group. Also, given the weather conditions in north Wales allow
for field activities all year round, if the Government restrictions
are lifted within three months, the Group would then expect to be
able to resume its field activities for the remainder of the
year.
In respect of the Group's Greenlandic exploration licences,
restrictions on travel and field activities for a period of three
months would, in the Company's opinion, likely mean that work on
site will not be possible this calendar year, not least due to the
amount of time needed to prepare for a significant field programme
in Greenland, which typically requires months of forward-planning.
It is possible, however, that the Greenlandic authorities will
grant a waiver to all licensees in respect of the requirement to
fulfil expenditure commitments in the current calendar year, as it
has done in previous years when global financial markets were
impacted by serious adverse conditions. But even if this is not the
case and the Group is unable to undertake field work during the
2020 field season, there is a significant amount of other
technical, geological and economic work and studies which can be
undertaken and which would constitute qualifying expenditure on
those licences. Further, if there remains any shortfall on
expenditure commitments at the end of this calendar year, the Group
may elect (on certain conditions) to carry forward any
under-expenditure to 2021, to reduce the size of the licence area
such that the expenditure commitment is met or to pay a fine of 50%
of any underspend.
Should the COVID-19 pandemic result in the Group's field work
activities being suspended for a considerably longer period than
the Group's current working assumption of up to three months, the
Group will revisit its assessment of whether this is likely to have
a material impact on the valuation of the Group's assets. If an
impairment is recognised in respect of any of the Group's assets,
it is probable that impairments may be required in respect of the
Company's investments in and loans to subsidiaries.
Both the COVID-19 pandemic and significant reduction in the oil
price are considered to be non-adjusting post balance sheet events
and therefore have not been taken into account in preparing the
statement of financial position as at 30 November 2019.
6. REPORTS AND ACCOUNTS
The statutory accounts for the year ended 30 November 2019 were
approved by the Board of Directors on 30 March 2020, will be sent
to shareholders of the Company in due course and will be delivered
to the Registrar of Companies following the Company's Annual
General Meeting. The report and accounts will also be made
available on the Company's website: www.albamineralresources.com .
The statutory accounts for the year ended 30 November 2018 have
been delivered to the Registrar of Companies.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAEDFDFXEEFA
(END) Dow Jones Newswires
March 31, 2020 06:20 ET (10:20 GMT)
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